Nigeria’s Digital Lending Boom Grows Up as Fairmoney Turns Toward Asset Finance

Nigeria’s digital loan boom was built on urgency. School fees due. Rent overdue. A trader short on stock before the weekend rush. Open the app, get a decision in minutes, accept the rate, move on.

Fairmoney is now extending that logic into financed assets, starting with motorcycles and smartphones.

The Nigerian fintech startup plans to finance smartphones and vehicles, starting with motorcycles. In a market where digital lenders built their reputations on unsecured microloans, this is a move into assets you can touch, track and repossess. It is also a sign of how the digital lending scene in Nigeria is maturing, or perhaps hardening, under pressure.

Fairmoney extended loans worth ₦150 billion in 2025, about $111 million, according to its Nigeria managing director. That figure reflects a double-digit percentage increase over 2024. Since its founding in 2017, the company has raised $57 million from investors including Tiger Global. But the more telling line is this: it now describes itself as primarily deposit-funded.

That single change reframes the entire strategy.

A digital lender that looks more like a bank

Venture capital once underwrote the risk appetite of many African fintechs. Growth came first. Unit economics could wait. In Nigeria, dozens of loan apps flooded the market, offering small sums at high interest to borrowers often locked out of traditional banks.

Regulators responded. The Federal Competition and Consumer Protection Commission began tightening oversight of digital lenders in 2022 and 2023. Public complaints about harassment and data misuse piled up. The Central Bank of Nigeria pushed for stronger consumer protection and licensing discipline. The era of frictionless expansion ended.

Against that backdrop, Fairmoney’s evolution into a deposit-funded institution carries weight. Deposits are not venture dollars. They belong to customers. They expect safety, stability, predictable returns. A lender funded by deposits must manage risk differently. Loan books need to look less like experiments and more like portfolios.

Asset-backed lending fits that logic. A smartphone financed over 6 or 12 months has resale value. A motorcycle can be tracked, insured, repossessed. In a default, there is collateral. That is not the case with a ₦50,000 unsecured cash advance.

The pivot is not cosmetic. It is structural.

Motorcycles first, because mobility is income

Starting with motorcycles is not accidental. In Nigeria’s urban centers, especially Lagos and other dense cities, two-wheelers are economic engines. They move goods, navigate traffic, and generate daily cash flow for riders. Financing a motorcycle is not just consumer credit. It is productive credit.

The bet is straightforward. If a rider can earn ₦10,000 to ₦20,000 a day, structured repayments become feasible. A financed motorcycle, unlike a personal loan spent on consumption, has a built-in income narrative.

Yet this logic carries risk. Enforcement in Nigeria’s transport sector is uneven. Some states restrict commercial motorcycles on major roads. Policy reversals are common. A lender tying its book to a particular asset class must read the regulatory mood carefully.

Still, the attraction is clear. Asset financing stretches ticket sizes upward. It extends repayment tenors. It deepens customer relationships beyond episodic borrowing.

It also moves Fairmoney into territory traditionally occupied by banks and microfinance institutions.

The crowded middle of Nigerian credit

Nigeria’s credit market has always had a missing middle. Large corporates access bank loans. Micro traders rely on informal savings groups or loan apps. In between sits a mass of individuals who earn regularly but lack formal credit histories.

Digital lenders exploited that gap with algorithmic underwriting. Access to phone data, transaction histories, and behavioral markers allowed them to price risk quickly. But speed came with reputational damage. High effective interest rates and aggressive recovery tactics created public backlash.

Now competition is tighter. Some loan apps have been suspended. Others have rebranded. A handful are trying to look and act more like regulated banks.

Fairmoney’s claim that it is primarily deposit-funded suggests it wants to anchor itself on that side of the divide. Deposit funding lowers cost of capital relative to venture equity. It also introduces scrutiny. Liquidity ratios, capital buffers, provisioning standards. These are not startup talking points.

If the funding base is more stable, the asset mix can evolve. Smartphones, for example, offer a different risk profile. They are essential tools for work and social life. Financing them creates a natural on-ramp to other products. The device becomes both collateral and customer acquisition channel.

Yet asset financing is capital intensive. Growth in this segment can strain balance sheets if default rates climb or if repossession proves messy. In Nigeria, secondary markets for used electronics and vehicles are active but fragmented. Recovering value requires logistics, storage, resale channels.

This is not the frictionless world of digital cash transfers.

Deposits change the tempo

When a fintech says it now resembles “your normal bank,” that is more than branding. It implies a longer horizon.

Deposits can be sticky. They can also flee at the first hint of trouble. A bank run in the digital era unfolds faster than in brick-and-mortar days. One viral rumor can trigger thousands of withdrawals in hours.

That reality imposes discipline. Credit growth must align with liquidity. Interest rates must balance borrower affordability with depositor returns. The model becomes less about blitzscaling and more about calibration.

Fairmoney’s ₦150 billion in loans during 2025 provides scale, but it is not yet systemic in a country of over 200 million people. The question is not whether asset financing can add volume. It is whether it can add quality.

Asset-backed portfolios often exhibit lower default rates than unsecured microloans, but only when underwriting is tight and recovery channels function. In volatile macro conditions, even productive assets can become burdens. Inflation erodes disposable income. Currency pressure raises import costs for smartphones and motorcycles. Price adjustments ripple through repayment schedules.

The macro backdrop in Nigeria remains fragile. Inflation has hovered in double digits for years. Policy rates have climbed. Consumer purchasing power is uneven. In that climate, extending larger-ticket loans is both opportunity and exposure.

The venture capital aftertaste

There is also a cultural layer to this pivot. Startups funded by global investors often chase valuation metrics. Revenue growth, user acquisition, geographic expansion. The logic is familiar.

Fairmoney raised $57 million from investors including Tiger Global. That capital enabled scale. It also created expectations. Venture funding cycles have cooled globally since 2022. African fintechs are no longer showered with easy money.

A deposit-funded structure reduces dependence on foreign capital markets. It localizes risk and reward. But it also reduces the tolerance for aggressive experimentation. Depositors are not patient shareholders waiting for an exit.

In that sense, Fairmoney’s asset financing move reflects a broader recalibration among African fintechs. Survival now depends less on narrative and more on balance sheet resilience.

A lender at a crossroads

There is a tension at the heart of this expansion. Digital lenders built their appeal on speed and simplicity. Asset financing introduces paperwork, logistics, partnerships with dealers, insurance requirements. It slows things down.

Yet it may also anchor the business in something sturdier than impulse borrowing.

If Fairmoney can underwrite motorcycles and smartphones effectively, manage repossessions without reputational fallout, and keep depositors confident, it will occupy a rare position. A fintech that began with small unsecured loans could evolve into a mid-tier retail bank with a strong asset finance book.

If defaults rise or regulatory winds turn again, the same move could strain capital and erode trust.

For now, the numbers tell part of the story. ₦150 billion in loans. $57 million raised since 2017. A double-digit percentage growth rate over 2024. A declaration that deposits, not venture capital, now fund the core operations.

Behind those figures sits a more fundamental question about Nigerian credit. Can digital lenders grow up without losing the edge that made them relevant in the first place? Fairmoney’s asset financing bet is an attempt to answer that in real time, one motorcycle and one smartphone at a time.

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